Governance as Leadership: Reframing the Work of Nonprofit Boards

By Richard P. Chait, William P. Ryan and Barbara E. Taylor

A new framework for helping nonprofit organizations maximize the effectiveness of their boards.

Written by noted consultants and researchers attuned to the needs of practitioners, Governance as Leadership redefines nonprofit governance. It provides a powerful framework for a new covenant between trustees and executives: more macrogovernance in exchange for less micromanagement.

Informed by theories that have transformed the practice of organizational leadership, this book sheds new light on the traditional fiduciary and strategic work of the board and introduces a critical third dimension of effective trusteeship: generative governance. It serves boards as both a resource of fresh approaches to familiar territory and a lucid guide to important new territory, and provides a road map that leads nonprofit trustees and executives to governance as leadership.

Governance as Leadership was developed in collaboration with BoardSource, the premier resource for practical information, tools and best practices, training, and leadership development for board members of nonprofit organizations. Through its highly acclaimed programs and services, BoardSource enables organizations to fulfill their missions by helping build effective nonprofit boards and offering credible support in solving tough problems. For the latest in nonprofit governance, visit www.boardsource.org, or call us at 1-800-883-6262.

• Language: English
• Publisher: Wiley
• Release date: Jan 11, 2011
• ISBN: 9781118045916

Book preview

CHAPTER 1

First Principles

We present here a set of first principles—basic premises that underlie the chapters that follow. Much like the overture to a Broadway show that can only be written after the composers have finished the score, we developed these principles toward the end, not the start, of the work that produced this book. These were not preconceived notions that generated predetermined content.To the contrary, this chapter appears first but was actually written last. We were only able to discern some first principles retrospectively because the propositions emerged as we discussed and drafted the other chapters. Only then did we notice some familiar refrains.

There are two ironies here. First, we maintain in Chapter 5 that organizations discover emergent strategies as well as design deliberate or planned strategies. Strategies, in effect, sneak up on organizations much as first principles sneak up on authors. Second, we contend in Chapter 5 that effective governance rests heavily on a board’s capacity for retrospective sense-making—acting and then thinking, making sense of past events to produce new meanings. We arrived at a new construct, governance as leadership, by writing and then reflecting, reframing, and revising—and by rethinking where governance stands today and why. While we never expressly intended to do so, the way we worked and the sense we made of governance echo the leitmotif of this book. The four principles summarized here distill recurrent themes and foreshadow arguments amplified in other chapters. To return to the analogy of the Broadway musical, these synopses are a medley, not the score.

PRINCIPLE ONE: NONPROFIT MANAGERS HAVE BECOME LEADERS

Nonprofit managers are not what they used to be, and most board members would probably respond Thank goodness. Historically, the stereotypical image of a nonprofit administrator was a well-intentioned do-gooder, perhaps trained as a social worker, educator, cleric, artist, or physician. The most successful practitioners—utterly unschooled about management, finances, investments, strategies, labor relations, and other real world realms—reluctantly, and sometimes accidentally, assumed greater managerial responsibility and eventually ascended to the top of the organization.Yesterday’s naive nonprofit administrator or executive director has become today’s sophisticated president or CEO, titles that betray changes in the stature, perception, and professionalism of the positions. (Likewise, staff have become line officers with such businesslike titles as vice president of marketing, strategy, technology, or knowledge management.)

Many executives have earned graduate degrees in nonprofit management from reputable universities; even more have attended executive education seminars and institutes on these same prestigious campuses. More important, nonprofit executives have acquired what formal education alone cannot confer: standing as organizational leaders (a status often underscored by the compensation package). As a result, trustees, employees, clients, and donors expect far more of nonprofit CEOs today than a genial personality, moral probity, managerial acumen, and a passionate commitment to the organization’s social mission. Stakeholders, in a word, expect leadership.

Constituents expect nonprofit CEOs to articulate clearly and persuasively the organization’s mission, beliefs, values, and culture. Both the process and the substance should galvanize widespread commitment toward these ends. With input from stakeholders inside and outside the organization, leaders are expected to shape agendas, not impose priorities; to allocate attention, not dictate results; and to define problems, not mandate solutions. These expectations we now have for leaders closely resemble conventional notions of governing.

In the not-for-profit context, governing means, to a substantial degree, engaging in these very activities. In theory, if not in practice, boards of trustees are supposed to be the ultimate guardians of institutional ethos and organizational values. Boards are charged with setting the organization’s agenda and priorities, typically through review, approval, and oversight of a strategic plan. Boards are empowered to specify the most important problems and opportunities that management should pursue. If this logic holds, as we contend, then many nonprofit executives are not only leading their organizations, but by practicing this new version of leadership, they are actually governing them as well.

The transition from nonprofit administrators to organizational leaders has been almost universally heralded as a positive development. Almost everyone touts the value of leaders and, in any case, that is not at debate here. If, however, managers have become leaders, and leadership has enveloped core elements of governance, then a profound question arises: What have been the consequences to boards as the most powerful levers of governing have migrated to the portfolio and purview of leaders?

PRINCIPLE TWO: TRUSTEES ARE ACTING MORE LIKE MANAGERS

While nonprofit managers have gravitated toward the role of leadership, trustees have tilted more toward the role of management. The shift has occurred because (as described in the Preface) trusteeship, as a concept, has stalled while leadership, as a concept, has accelerated. The net effect has been that trustees function, more and more, like managers.

This will no doubt strike many as an unlikely claim since the number one injunction of governance has been that boards should not meddle or micromanage. Despite this oft-repeated admonition, much of the prescriptive literature on trusteeship actually focuses squarely on operational details: budgets, audits, facilities, maintenance, fundraisers, program reviews, and the like. To discharge that work, most boards structure committees around the portfolios of line officers: finance, development, government relations, program evaluation, and customer/client relations, for example. Moreover, management competence typically ranks high on the list of desired attributes of prospective trustees. Nonprofits usually want a Noah’s ark of professional experts. As a result, many boards resemble a diversified consulting firm with specialties in law, labor, finance, marketing, strategy, and human resources. Constructed and organized in this way, boards are predisposed, if not predestined, to attend to the routine, technical work that managers-turned-leaders have attempted to shed or